I have tested 9.3 Foundation SP1 Build 1688, PLTS 9.3.1 Foundation SP2 Build 629, and Esri Production Mapping 10 Patch1 Build 464 against file gdb and SDE (Oracle) database. I have an AOI feature class with several records. The records have a NAME field. For one of the records, I changed the NAME = Cook's Ferry. Using MPS Atlas, I run Build Map Series to create my map series and I create Feature Layer dynamic text using the NAME field in my AOI feature class. As I use 'Set Current Map Sheet', the Cook's Ferry map sheet is displayed without error and there is no error displaying the dynamic text.
What version of MPS Atlas are you running?
For future questions regarding MPS Atlas, can you please post to the Esri Production Mapping forum. I usually monitor that forum.